A business arranges insurance for a vehicle purchased on 1 October 2016. The charge for insurance of £1,000 is to cover a six-month period starting on 1 October. Given, with a financial year-end following the calendar year, that half of this charge belongs to the next financial year, the account for insurance would appear as follows:
|
Insurance |
|||||
|
2016 |
£ |
2016 |
£ |
||
|
1 Oct |
Bank |
1,000 |
31 Dec |
Income statement |
500 |
|
31 Dec |
Balance c/d |
500 |
|||
|
1,000 |
1,000 |
||||
|
2017 |
|||||
|
1 Jan |
Balance b/d |
500 |
|||